Correlation Between Westshore Terminals and KDA

Can any of the company-specific risk be diversified away by investing in both Westshore Terminals and KDA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Westshore Terminals and KDA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Westshore Terminals Investment and KDA Group, you can compare the effects of market volatilities on Westshore Terminals and KDA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Westshore Terminals with a short position of KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and KDA.

Diversification Opportunities for Westshore Terminals and KDA

0.45

Correlation Coefficient

Westshore Terminals  KDA

Very weak diversification

The 3 months correlation between Westshore and KDA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Westshore Terminals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Westshore Terminals Investment are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and KDA go up and down completely randomly.

Pair Corralation between Westshore Terminals and KDA

Assuming the 90 days trading horizon Westshore Terminals Investment is expected to under-perform the KDA. But the stock apears to be less risky and, when comparing its historical volatility, Westshore Terminals Investment is 5.46 times less risky than KDA. The stock trades about 0.0 of its potential returns per unit of risk. The KDA Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14.00  in KDA Group on September 4, 2024 and sell it today you would earn a total of  14.00  from holding KDA Group or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Westshore Terminals Investment  vs.  KDA Group

Westshore Terminals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westshore Terminals Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Westshore Terminals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

KDA Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KDA Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, KDA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westshore Terminals and KDA

The main advantage of trading using opposite Westshore Terminals and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westshore Terminals position performs unexpectedly, KDA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KDA will offset losses from the drop in KDA's long position.

The idea behind Westshore Terminals Investment and KDA Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.